The Economic Analysis of Volcker Rule

This paper aims to analyze the final regulations of the Volcker Rule in order to assess any lingering concerns related to the administration of the Rule. Despite the problems criticized by many practitioner and scholars, implementing the Volcker Rule has benefits for banks and the overall economy. First, prohibiting proprietary trading activities may make individual institutions and the banking system as a whole safer. Second, the prohibition on banks’ ownership interest in private equity and hedge funds directly addresses a source of bank default risk – the Volcker Rule limits banks’ exposure to risky private equity and venture capital activities, which are activities that contributed to banks’ probability of default during the 2008 financial crisis. Third, heightened compliance standards and documentation requirements will help improve transparency of banking activities and contribute to bank stability.

Central and Eastern European CO2 Market—Challenges of Emissions Trading for Energy Companies

The aim of this article was to identify challenges of emissions trading that the Polish and CEE Central and Eastern Europe energy industry will face, as well as to indicate key implications for the competitiveness of the companies from the energy sector resulting from that trading. The EU Emissions Trading Scheme (ETS) is the emissions trading system, which results from the EU policy concerning climate change. It is a tool for reducing greenhouse gas emissions (GHG). The system regulates an annual allocation of the allowances. The price of CO2 emission allowances is subject to constant fluctuations because it depends on various macroeconomic factors as well as is an effect of proprietary trading by global investment banks. Polish energy companies have an increasing share in the emission of CO2 in the European market. This is due to the fact that other European countries are rapidly moving away from fossil fuel-fired sources. The cost per MWh related to CO2 price has been growing in the last 10 years from ca. 5 up to 30 EUR/MWh at the beginning of 2021. From an electric power utilities perspective, the ability to set up a proper strategy in trading CO2 will be crucial to be competitive in the wholesale power market. The higher price of CO2 (and electric power) at the domestic market in relation to more green (more renewable energy sources RES in energy mix) surrounding countries translates into a worse competitive position.

Volcker Rule in Practice

Established as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Volcker Rule’s restriction of banks and financial companies from participating in proprietary trading was conceived of as a response to the systemic institutional failures that are commonly noted to be partially responsible for the financial crisis of 2008. Over its short and contentious lifetime, the Rule has been widely praised by some as a necessary step toward limiting unsustainably risky corporate investment practices, and widely vilified by others as being poorly drafted, impracticably restrictive, and only tenuously connected to the crisis precipitating its enactment. The conspicuous disunity among participants in this discussion reflects, in part, the difficulty of measuring the direct impact that the Volcker Rule has had since its enactment, particularly given the complexity of the investment activities the Rule attempts to regulate and the dearth of conclusive statistics indicating which phenomena are accurately attributable to the Rule’s interference. Through a survey and analysis of the public’s input and assessment of the Volcker Rule and its more recent development, this Note explores how administrative processes have fared in giving an adequate voice to the various viewpoints of affected private citizens, businesses, and public entities. Ultimately, this Note argues that the Volcker Rule’s surprisingly modest evolution to date is overshadowed by charged rhetoric, vast information gaps, and unbalanced regulatory feedback rather than substantive bilateral exchange—a phenomenon frustratingly typical of the democratic processes in the context of complex financial reform. This Note concludes by offering reflections on the Volcker Rule’s evolution to date and what the data examined has to say about the successes and shortcomings of the lawmaking processes driving that evolution forward.